Over the last few weeks, the United States and China have each announced new restrictive fees on shipping between their two countries. This is a huge step back in their years-long trade war. That’s the easy part. Both countries are now embroiled in a broader set of bilateral disputes, extending far beyond just trade. This situation could not come at a more tense time for the bilateral relationship.
The new surcharges are set to go into effect on June 19, 2020. Foreign shipping companies regularly operating between the U.S. mainland and China will be significantly affected. This unambiguous decision makes it even more difficult for the shipping sector. It is already confronting a host of other challenges due to the rising drumbeats of the US-China tensions. Asking for relief These fees will certainly cause logistical and supply chain chaos. Companies will need to plan for the new fiscal reality.
The Port of Oakland, one of the key cargo hubs for the U.S. West Coast. This extension removes a crucial barrier that venerates this important place. Hundreds of thousands of container vessels arriving from China will incur charges to the newly established landed cost. That would immediately raise prices for consumers and increase costs for businesses that rely on imported goods. Yet the U.S. continues to import record levels of products from China. This means that these fees have the potential to affect a wide variety of industries from top to bottom.
Beyond the impacts of this troubling trade war, the larger ramifications are clear in noting the current state of the shipping sector. These fees are an important piece of a much larger puzzle. They symbolize the new and continued economic arms race between the two countries. They clash on tariffs, technology transfer, and regional hegemony. In the process, their dispute places the costly burden on the industry that helps support both of their causes.
With the emergence of this new reality, the onus now falls on shipping companies to adjust to this changing environment. They need to budget for these added fees. Beyond that, they must factor in how rising trade tensions, a new normal in the world and US particularly, will affect their future business. The uncertainty surrounding that situation is the double-edged sword creating danger for exporters or importers—any company that relies on international trade.